2015 (9) TMI 1344 - AT - Income Tax

Addition on un-reconciled professional receipts on the basis of difference between the information gathered from the Annual Information Report(AIR) and professional receipts declared as per books of account - Held that - We set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition on the ground that the differences between the information gathered from AIR and the professional receipts as per books of account is not corroborated by any third party evidence to suggest any nondisclosure of professional receipts by the assessee for the year under consideration - Decided in favour of assessee. Computation of interest chargeable under section 234B - whether interest payable under section 234A of the Act, for the purposes of section 140A of the Act, is to be computed with respect to the tax payable on the income returned or on income determined in the regular assessment - Held that - Identical controversy has been considered by the Tribunal in the assessee s own case for A.Y 2000-01 and 2001-02 and we agree with the submission made by ld. A.R that the interest payable under section 234B for the purpose of adjustment against the tax paid under section 140A has to be computed with respect to assessed tax determined on the basis of total income declared in the return. But this is only for the limited purpose of adjustment of payment made u/s. 140A against interest payable under section 234B while making computation of interest payable by the assessee under section 234B, which has to be computed with respect with respect to the total income determined in regular assessment as per the definition of assessed tax given in section 234B. The assessee has also followed the same procedure with which we agree. The or of CIT(A) confirming the method followed by the AO is therefore, set aside and the claim of the assessee is allowed - Decided in favour of assessee for statiscal purposes.

Summary

Issues:
1. Addition of un-reconciled professional receipts based on AIR information.
2. Computation of interest chargeable under section 234B of the Act.

Analysis:

Issue 1: Addition of Un-reconciled Professional Receipts
The appeal pertains to the assessment year 2009-10, where the assessee, a partnership firm of Chartered Accountants, challenged the addition of Rs. 28,43,777 as un-reconciled professional receipts. The dispute arose from the variance between professional receipts declared in the books of account and the information from the Annual Information Report (AIR). The Assessing Officer added the said amount despite the assessee's explanations. The CIT(A) sustained the addition except for a minor amount. The ITAT found that the assessee's explanations were valid for certain parties where discrepancies were noted. For instance, in cases where invoices were raised by a sister concern and not the assessee, the discrepancies were clarified with supporting documents. The ITAT held that without third-party verification, additions solely based on AIR information were unjustified. Consequently, the ITAT directed the Assessing Officer to delete the addition of Rs. 28,43,777.

Issue 2: Computation of Interest under Section 234B
The second issue concerned the computation of interest chargeable under section 234B of the Act. The dispute revolved around whether the interest payable under section 234B should be calculated based on the total income declared in the return or the income determined in the regular assessment. Citing a precedent from the Tribunal in the assessee's earlier case, the ITAT ruled in favor of the assessee. The ITAT directed the Assessing Officer to recompute the interest chargeable under section 234B in line with the Tribunal's earlier decision. Consequently, the ITAT partially allowed the appeal of the assessee.

In conclusion, the ITAT ruled in favor of the assessee on both issues, directing the deletion of the addition of un-reconciled professional receipts and the recomputation of interest under section 234B.